Category Archive: 4.) Marc to Market

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October 2024 Monthly

2024-09-28

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2024-09-28

With the Federal Reserve's 50 bp rate cut, seven of the G10 central banks have begun an easing cycle that will extend, broaden, and may accelerate going forward. Australia and Norway will likely join the party next year, while some, like Canada and Sweden may increase the pace of its cuts in Q4.

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Yen Surges After New LDP Leader Picked, while the Greenback Consolidates

2024-09-27

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2024-09-27

Overview:  Japan's LDP leadership selection has not been the dragged-out affair that many thought likely with a record nine candidate vying for the post. It turns out that the economy may have been less important than foreign affairs and the threat posed by China. Shigeru Ishiba is strong nationalist, who reports indicate own shares in Nippon Steel, whose bid for US steel has faced domestic opposition in the US on seemingly nationalist, rather than...

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China’s Politburo Validates and Extends Pivot while the US Dollar Sees Yesterday’s Gains Pared

2024-09-26

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2024-09-26

Overview: After its recent losses were extended, the dollar reversed higher in North America yesterday. Technically, this looks to have ended the sharp drop over the last couple of weeks, but there has been no follow-through gains today and a consolidative tone emerged. G10 currencies are firmer today, led by the recovery in the Antipodeans. The Swiss National Bank delivered the expected 25 bp rate cut, but the Swiss franc is up about 0.25%....

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Run on the Dollar Stalls after the Market Boosted Odds of another 50 bp Fed Cut

2024-09-25

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2024-09-25

Overview: Weak US consumer confidence, especially regarding the labor market boosted speculation of another half-point Fed cut in November when the central bank meets again. This weighed on the dollar. Sterling and the Australian dollar rose to new 2 1/2-year highs. The PBOC followed up yesterday's package with a 30 bp cut in the one-year Medium-Term Lending rate. After extending its losses earlier today, the dollar has steadied and turned higher...

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China Goes Big, and Market (Initially) Gives it the Benefit of the Doubt

2024-09-24

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2024-09-24

Overview: News of China's multifaceted support measures have bolstered risk appetites today. The dollar is mostly softer and only the yen and Swiss franc among the G10 currencies have been unable to find traction against the greenback. Most emerging market currencies are also trading with a firmer bias. China's measures include measures to support the stock and housing markets. The seven-day repo rate was cut by 20 bp (to 1.50%) and reserve...

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European Currencies Start Week Softer, while the Dollar Bloc is Firm

2024-09-23

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2024-09-23

European currencies are trading with a softer bias to begin the new week. Soft preliminary PMIs appeared to be the main culprit but Australia's PMI disappointed ahead of tomorrow central bank meeting, and the Australian dollar's small gain leads the G10 currencies today.

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Week Ahead: Did the Fed’s Rate Cut Signal a Near-Term Low in US Rates?

2024-09-21

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2024-09-21

The Federal Reserve kicked off its easing cycle with a 50 bp rate cut on September 18. It is the seventh G10 central bank to cut rates this year. Japan is going in the other direction, albeit slowly. Norway's central bank says do not cut on a rate cut this year but be more confident of rate cuts next year. That leaves the Reserve Bank of Australia, which meets this week. It has been pushing against market speculation of a rate cut this year, and...

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Consolidation Featured, but the Yen and Mexican Peso are Under Pressure, While PBOC Fixed the Dollar Lower

2024-09-20

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2024-09-20

Overview: The week is winding down and the US dollar is mostly consolidating against the G10 currencies. Two exceptions stand out. First, sterling is the only G10 currency higher on the day. It follows the BOE's cautious hold yesterday and stronger than expected retail sales today. The other exception is the Japanese yen, where the BOJ stood pat and did not seem to have the urgency after a move next month, even though the national CPI ticked up....

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Stocks Higher, Dollar Lower: Post-Fed

2024-09-19

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2024-09-19

Overview: The Federal Reserve's 50 bp rate cut has made for a volatile 15 hours or so in the foreign exchange market. As North American traders return to their posts, the greenback is heavy. They will find that only the yen and Russian ruble are softer. Norway delivered a hawkish hold, and the krone leads the G10 currencies with more than a 1% gain. Australia's employment data was sufficiently strong that the Reserve Bank of Australia will likely...

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Atlanta Fed GDP Tracker Says US Economy is Expanding at 3% Clip for 3rd Quarter in Past 4, and the Fed is Going to Do What?

2024-09-18

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2024-09-18

The dollar remains offered ahead of the FOMC meeting outcome. That no official has pushed back against the press story that some suspect was planted by the Fed Chair (will a reporter specifically ask him about it today?) during a quiet period should not be taken as evidence one way or the other. And many understand that it is not unprecedented.

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Risk of 50 bp cut by the Fed Tomorrow Keeps the Greenback on the Defensive

2024-09-17

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2024-09-17

With heightened expectations of a 50 bp cut by the Federal Reserve tomorrow, the dollar has not gotten a reprieve and is softer against nearly all the currencies. Japan's long holiday weekend ended, and the greenback has held above JPY140 today.

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Greenback Continues to Trade Heavily amid Heightened Speculation of a 50 bp Cut Wednesday

2024-09-16

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2024-09-16

Overview: The markets are continuing to be impacted by the possibility that Fed officials planted a press report to put 50 bp cut back on the table after the market had moved away from it after the recent jobs data and CPI. In the Fed funds futures, there is around an 80% of a half-point move on Wednesday discounted and about an 80% chance of a second 50 bp cut this year. This has taken a toll on the greenback and cut short the technical correction...

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Week Ahead: Four G10 Central Banks Meet, Only the Fed Moves

2024-09-14

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2024-09-14

The market had been gradually scaling back from speculation of a 50 bp cut this week by the Federal Reserve. The euro and sterling tested important technical support near $1.10 and $1.30 respectively. The Dollar Index set last week's high after the August CPI. However, the general tone of the markets changed, spurred at least initially by a Dow Jones story that many observers believe was likely planted by senior Fed official to put a 50 bp cut back...

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Heightened Speculation that Fed may Cut 50 bp Next Week Sends the Dollar Lower

2024-09-13

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2024-09-13

Overview: The US dollar is falling against nearly all the world's currencies today amid heightened speculation that a 50 bp cut is still on the table for next week's FOMC meeting. In the derivatives market, the odds are the highest in several weeks. The ostensible trigger was apparently a news wire story by a reporter thought to be used by some Fed officials to foster communication. A few former Fed officials also seemed to endorse a half-point...

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The ECB and the $1.10 level in the Euro

2024-09-12

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2024-09-12

Overview:  The US dollar is narrowly mixed against the G10 currencies. The dollar bloc, Japanese yen, and Swiss franc are sporting slightly softer profiles, while the European currencies enjoy a firmer today. There is more than 3 bln euro in options struck at $1.10 that expire today that still seem to be in play. And there is a large option at GBP1.30 that expires Monday. The ECB's rate decision and President Lagarde's press conference are the...

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Little Discussion about the US Budget Deficit in the Debate, But Falling Yields Drag the Greenback Lower

2024-09-11

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2024-09-11

Overview: The US 10-year yield is lower for the eighth consecutive session. The yield was near 3.90% at the end of August. It is now flirting with 3.60%. The two-year yield has fallen 35 bp since the end last month to about 3.55%. Although Vice-President Harris was seen winning last night's debate, it is not clear if it was a more important driver than the continued decline in US rates, despite the budget deficit not the discussed much in the...

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Consolidative Tuesday

2024-09-10

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2024-09-10

Overview: The US dollar is mostly consolidating so far today with a slightly heavier bias against the G10 currencies and most emerging market currencies. The larger than expected Chinese trade surplus did not lift the yuan. The greenback is trading above its 20-day moving average against the Chinese yuan for the first time since late July. Sterling is rising for the first time in three sessions after a strong jobs report. The Canadian dollar is the...

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US Dollar Returns Bid on the Back of Firmer Rates

2024-09-09

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2024-09-09

Overview:  After falling following the US jobs report before the weekend, US interest rates have come back firmer, helping the give the dollar a boost. A downward revision to Japan's Q2 GDP, reflecting weaker consumption, business investment, and a little more inflation, have heled the greenback retrace the pre-weekend losses against the yen. Softer than expected price gauges, the setback of the yen, and the rise in US rates has seen the offshore...

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Week Ahead: Can the US CPI Do What Payrolls Didn’t and Persuade the Market that the Fed Will Deliver a 50 bp Cut ?

2024-09-07

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2024-09-07

After the US jobs report and Fed speak, the market scaled back the odds of a 50 bp cut at the September 17-18 FOMC meeting. It settled last week slightly below a 30% chance. The odds were shaved for the second consecutive week. Fed officials have indicated that the full employment mandate is now of greater significance given its growing confidence that inflation is heading back toward its 2% target. Next week's August CPI and PPI are likely to be...

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The Market Discounts around a 40% Chance of not One but Two 50 bp Cuts in last Three FOMC Meetings of the Year Ahead of Jobs Report

2024-09-06

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2024-09-06

Overview: The US jobs report is front and center. The market is going into the report with about a 40% chance of a 50 bp Fed rate cut later this month. The Dollar Index is trading lower for the third consecutive session. Helped by the fifth consecutive decline in US 10-year yields, the yen approached last month's high but without the turmoil seen in July and August. Still, equity markets are under pressure. Most large markets in the Asia Pacific...

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